Cross-chain bridges let users move assets between blockchains, breaking the on-chain trail that sanctions screening tools follow. OFAC designated the Tornado Cash bridge in 2022, proving bridges are sanctions-relevant infrastructure.
TL;DR: Cross-chain bridges create a fundamental screening gap: a wallet flagged on Ethereum can move USDC to Solana via a bridge, appearing as a clean address on the destination chain. Compliance teams must screen both the source address and the bridge recipient.
A sanctioned entity deposits funds into a bridge contract on Chain A. The bridge locks or burns those tokens and mints equivalent tokens on Chain B. The recipient on Chain B has no direct link to the sanctioned address on Chain A. Standard wallet screening on Chain B alone returns clean.
The Lazarus Group (North Korea, designated under OFAC's DPRK program) has systematically used cross-chain bridges to launder stolen crypto. OFAC designated Tornado Cash in August 2022 specifically because it was used to process over $455 million in illicit proceeds including funds for the DPRK.
| Method | What it catches | Limitation |
|---|---|---|
| Source-address screening | Flagged deposits on Chain A | Requires real-time monitoring |
| Bridge contract monitoring | Direct interaction with designated bridge contracts | New bridges appear constantly |
| Destination clustering | Funds arriving on Chain B from flagged Chain A deposits | Timing window is fuzzy |
| Graph analysis | Multi-hop paths through bridges | Computationally expensive |
AI agents processing payments across multiple chains must screen at both source and destination. The recommended control: screen every bridge interaction as a two-leg transaction.
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